Digital Realty DLR announced that it completed the expansion of its One Century Place facility, also known as TOR1, in July. The expansion is anticipated to add 6,000 square feet of space and 1,500 kilowatts of colocation capacity in greater Toronto.
The expansion in Toronto is a strategic fit as the city has emerged as a major regional connectivity tech hub in North America and will offer additional colocation capacity to cater to the region’s growing networking needs.
Moreover, as technology and data-centric enterprises move or expand in the region, facilities like One Century Place are imperative for providing customers the flexibility needed to achieve their digital goals and will help them accelerate their digital transformations.
Additionally, Digital Realty aims to help businesses to move to a decentralized infrastructure that will scale new digital transformation initiatives. In fact, the increased capacity will help to address higher demand from distributed data hosting, connectivity and exascale computing in a single campus, network bandwidth requirements and flexibility to easily scale capacity.
In fact, Digital Realty operates more than 20 megawatts of capacity across two data centers in the Toronto region and has the capacity of more than 60 megawatts at full build-out.
Moreover, the company will augment its offerings with IBM's Direct Link 2.0 capabilities. This will provide direct access to the IBM Cloud in Toronto, offering customers broader access to IBM services, including AI, blockchain, data analytics and quantum computing.
Demand for space at data-center REITs’ properties has been shooting up on growth in cloud computing, Internet of Things, artificial intelligence and big data, and an increasing number of companies opting for third-party IT infrastructure.
The heightening reliance on technology in the wake of the pandemic has now become an added advantage, thanks to the work-from-home trend, e-retail and e-learning gaining popularity, spurring demand for data-center space. As such, data-center REITs, including Equinix EQIX, CyrusOne Inc. CONE and CoreSite Realty Corporation COR, are likely to continue witnessing significant demand.
Moreover, shares of this Zacks Rank #3 (Hold) company have rallied 27.7% over the past year against the industry’s decline of 7.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, a competitive data-center landscape is a concern for the company. In fact, it competes with several data-center developers, owners and operators, many of whom enjoy the ownership of similar assets in locations same as Digital Realty. Amid this, there is likely to be aggressive pricing pressure in the data-center market.
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